Finance

A Good Half-Year

titERE must have been few occasions during recent years when the situation has not seemed to be overshadowed by difficult problems. At the present moment, for example, we still have unsettled conditions in Europe, a deadlock in the:Disarmament crisis, a highly unsatisfactory_poSition in Germany with threatened default on important ex- ternal loans, while international trade is still restricted by tariffs, quotas and disorganized currencies. The fact remains, however, that while these circumstances have existed for sonic time past, a retrospective view shows that in many directions there has been real progress.

This is certainly true as regards the first half of the present year. It has been a period during which there has been a further improvement in home trade, so that. the employment statistics have presented encouraging results during almost every month of the Half-Year, while for the first 24 weeks the four English Trunk Railways have shown an increase in gross, earnings of £3,339,000, as compared with a decrease over the Same period of last year of £2,761,000. As regards the National Finances, the Half-Year has also been a good one. It has witnessed the presentation of a Budget showing a substantial surplus enabling the Chancellor of the Exchequer to make a moderate reduction in the Income Tax,. even while forming very conservative estimates of revenue for the coming year. In the Money Market, notwithstanding low rates of interest, banking profits are also likely to have been maintained, and many of the reports recently published of industrial companies have shown considerable improvement.

A RISE IN SECURITIES.

These favourable developments have, moreover, been fully reflected in the course of prices of public securities. Taking, for example, a representative list of 365 securities selected by the Bankers' Magazine, the aggregate appre- ciation in market values of these securities for the first half of this year was no less than £238,000,000, of which £126,000,000 was attributable to a rise in fixed interest stocks and £112,000,000 to an advance in what is known as ,variable dividend securities. Moreover, if comparison were made with a year ago the appreciation is even more striking. As compared with June of last year, the same securities in the fixed interest group show an appreciation of no less than £248,500,000, while the variable dividend group reveals an increase of £167,400,000, making an aggregate expansion in capital values of the 365 selected stocks of as much as £415,900,000. .

It may, I think, be of interest to show in detail the various sections of the Stock Markets which have been affected by the trend of price movements during the past half-year and during the past year, that is, since June, 1933. This will be seen from the tables set out at the foot of this article.

From them it will be seen that during the whole twelve months there has been a . further apprecia- tion in the Selected British and Indian Funds of £145,000,000, of which £84,000,000 occurred 'during the past six months. On the other hand, it will be seen that while during the year English Railway Debentures have risen appreciably, there has been a moderate set-back during the past six months. The Railway Preference Shares, however, have been consistently good, rising in market value by £12,000,000 during the past half-year, and by £79,000,000 in the entire year.

RISE IN INDUSTRIALS.

In the variable dividend group the movements are very interesting. Home Railway -Ordinary Stocis, Which, over the entire year have advanced appreciably, have experienced a set-back in the second half of the year. American Railway Shares, on the other hand,' though still showing a- heavy decline over the twelve months, have rallied appreciably during -the past 'six months. Most striking, perhaps, has been the ", great and con- tinued advance in the shares of Industrial Companies, the gain in the group of thirty-eight Stocks for the year being 181,000,000,-of which- 147;000;000 was established during the past six months. In the speculative Markets a feature has been the great rise in South African Gold Mines -owing to the advance in .the sterling price for- the metal. On the whole, however-,,it will be seen that there are few instances where there- has been any material set- back, and while I am far from suggesting that the.upward movement :in. securities has ' come Av..- an: end;' I have furnished these figures setting out the remarkable gains for the past six months, and the past year, as offering some explanation of the present pause in activity. . I, think the figures also suggest that sonic caution -is required in making future selections of investments. • So far as high- class Trustee Stocks are concerned, however, the trend of prices is evidently still upwards.

TABLES

Market Values.

Change on Change on the half-year. the year.

10 British and Indian Funds ..

9 Corporation (U.K.) StOcks . : 8 Colonial Government Stocks ' 8 Corporation Stocks (Colonial) 7 Corporation Stocks (Foreign)

£-

84,000,000 4,000,000 --I- 1,000,000 + 500,000 No change

£

+145,000,000

+ 2,000,000 + 2,000,000 . 500,000 No change 26 Foreign Government Stocks + 9,000,000 + 16,000,000 6 British Railway Debentures — 2,000,000 + 24,000,000 6 British Railway Preferences

--I- 12,000,000

+ 79,000,000 7 United States Bonds (Gold) ± 18,000,000 — 20,000,000 ,L

87 Fixed Interest Stoeks +126,500,000 +248,500,000 13 British Railway Ord. Stocks

• ±. -1,000,000

+ 26,000,000 5 Indian Railway Stocks .. No change + 2,000,000 5 Colonial Railways .. + 1,000,000 + 2,000,000 11 United States Railway Shares + 17,000,000 .± 23,500,000 20 Foreign Railways .. — . 500,000 — 7,000,000 13 British Bank Shares + 12,000,000 + 19,000,000 18 Colonial & For. Bank Shares + 2,500,000 + 3,900,000 10 Brewery Stocks .. + 2,000,000 + 7,000,000 7 Canals and Docks + 1,000,000 + 3,000,000 38 Commcl. and Industl. Shares + 47,000,000 + 84,000,000 8 Electric Lighting and Power No change No change 9 Fin. Land. and Invest. Shares + 700,000 + 1,000,000 7 Gas Stocks No change + 1,000,000 17 Insurance Shares .. + 9,000,000 . + 7,000,000 14 Iron, Coal and Steel Shares.. + 1,000,000 + 7,000,000 5 Nitrate Shares .. No change No change 10 Oil Shares .. — 1,000,000 + 10,000,000 9 Rubber Shares .. + 1,500,000 + 2,000,000 5 Shipping Shares .. — 1,800,000 — 2,000,000 6 Tea Shares .. No change + 1,000,000 9 Telegraph and Telephones .. — 1,000,000 — 2,000,000

7 Tramway and Omnibus ..

No change — 1,000,000 19 S. African Mines .. + 22,000,000 + 30,000,000 6 Copper Mines + 500,000 — 3,000,000 7 Miscellaneous Mines.. .. No change No change 278 Valuable Dividend Securities +£111,900,000 +£167,400,000 ARTHUR W. KIDDY.